Development

What the 990 is telling your funders

form990

Happy Tax Day!

The IRS 990 Form is one of those things that just has to get done because…well, because it has to. The harsh reality is that, other than enforcing the filing requirement, the IRS doesn’t have the capacity to do much with all of the information that they require you to provide. Funders, on the other hand, consistently use the 990 to get a picture of an organization’s capacity and financial health.

  • The number that funders are most inclined to hone in on is Liquid Unrestricted Net Assets, better known as LUNA, for some crazy reason (Get it? See what I did there?). Funders want to know what your reserves look like, how much cash you have on hand (if any). They care less about your overall assets, which might include a building or some other instrument that can’t be quickly converted to working capital.  What they want to know is, how long can your organization survive at its current burn rate?
  • The year-to-year comparisons on the 990 are useful to funders in identifying trends, growth or contraction. They look for seismic shifts in your revenue streams, spikes in expenses, or other indicators of a financial sea change.
  • The 990 is also used to examine the overhead question (everyone’s favorite topic, I know). How much money is the organization spending on program, versus management and fundraising?  There isn’t any set standard – private funders have their own, which can  range from 75/25 and up.  The BBB suggests that 65/35 is a healthy number. And government tends to restrict expenditures on overhead to 10%, unless you go through the exhaustive process of applying for a indirect cost rate. The main thing to consider when it comes to overhead is that you need to be aware of your organization’s rate and be able to give it context – a rationale, justification or explanation. You should also be able to explain major changes in your overhead rate over time.

So before you blast out that 990 and publish it on your website, make sure you’ve thoroughly examined it yourself – and prepare yourself with talking points to address the questions of your funders.

 

How Watertight is Your Fundraising?

leaky bucket

How do you know whether your organization is maximizing on its fundraising efforts?

The Leaky Bucket Assessment is a quick, informal tool that measures the level of maturity of nine basic practices that contribute to (or detract from) the fundraising team’s effectiveness, efficiency, and productivity.  The Leaky Budget Assessment measures:

  • how organizations qualify, acquire, retain or upgrade funders
  • what metrics are being used to manage fundraising
  • what methods are used to improve undesirable results

The Leaky Bucket Assessment is free, takes 5 minutes, and you’ll get your CONFIDENTIAL results immediately. You’ll also receive a copy of your results by e-mail and the opportunity to schedule a free, 30-minute debrief from Leaky Bucket mastermind Ellen Bristol.

Click here to take the Leaky Bucket Assessment.

Why is Everyone so Afraid of Results?

fear of results

There’s no purpose to this work other than to achieve results. So why are we afraid of them? Ask a service provider about intended or expected results and chances are they’ll start talking sideways about how difficult and complex it is to define success and/or impact in a measurable way.

Yes, tracking results is difficult. Yes, generating results is complex. Yes, there are many factors that can get in the way of success. I say so what. If you’re doing  service work and you’re not willing to track results (or at least try), then you ought to be off somewhere else, doing something else.

If you’re working on a project to support young people in getting college degrees, you should be able to state, at any given moment, exactly how many young people you’ve helped to get into college – over the past week, month, quarter, and year. You should be able to state how many are still in college, how many have dropped out, and what those who did are doing right now. That’s a result-based approach.

If you run a jobs program, how many people have you helped to get jobs? If you run an early education program, how many children are reading on level by third grade? If you run a drug abuse prevention/intervention program, how many people have you helped to rehabilitate? If you’re a basketball coach, is your team scoring more points than the other? If you don’t know, then you can’t possibly know whether your program is working.

There’s no downside to developing a results statement that’s responsive to the organization’s mission and activities. The worst that can happen if you miss your mark is that you learn things about your process that will allow you to make course corrections and generate better results in the future.

So pick a number and then go after it. Monitor it closely, every day if you have to. Post the number on the wall and update it daily, weekly, monthly. Get your team to buy into the idea that the number matters more than anything else.  Because it does. Convince them that the number is the main reason why they do the work.  Because it is. If they disagree, then they should be off somewhere else, doing something else.

Click here to learn more about Results-Based Accountability.  Or visit the websites of the Staten Island Foundation to download a useful tip sheet on writing powerful results statements.

 

 

 

The Case for Outsourcing Development

UnderDeveloped

The harsh reality about development staffing (as noted in the above 2013 report by CompassPoint), is that you’re very likely to go through a search every two years.  Good Development Officers move on to higher pay and other adventures, and the not-so-good ones just move on.  Either way, they leave a big hole in your organization’s operation as you face a competitive and dynamic funding landscape. So in your search, the major question to ask is: How does your development department spend the next two years building momentum, being productive, generating results, and making sure it can sustain its efforts?

Development, like HR and Finance, is a critical system in any organization.  When effectively managed, these systems enable leadership to focus on vision, mission and strategy (aka the real, actual work).  Similar to the benefits of outsourcing HR and Finance, retaining a Chief Development Officer (CDO) Consultant has the following advantages:

  • It provides senior level management and leadership experience
  • Consists of a focused scope of work with clear deliverables and measures for success
  • Provides objectivity and a new perspective/approach to building sustainable systems
  • Allows for more flexibility in creating roles/building staff
  • Is more cost-effective and efficient than the “revolving door” option of hiring a FT development officer
  • It frees the CEO to focus on the real, actual work of the organization

Shameless plug: Before you update that job posting and launch your semi-annual search for next Development Officer, schedule a free consultation and we can talk about whether outsourced development is a good fit for your organization.

Fundraising and Organizational Brand

To sustain long-term fundraising success, an organization must show potential donors that its work is meaningful, relevant, and impactful. But simply doing good work that addresses a pressing social need is no guarantee that an organization will attract funders—or even get a positive response when approaching funders. Nonprofits need a communications strategy that highlights the importance and relevance of their work, but more broadly, they need to develop their organizational brand.

All nonprofits inevitably have a brand; they should work to shape it. It is the sum of associations that people have about them in terms of values, practices, and visual identity. Rather than hoping people will pick up on their good work, nonprofits can—and must—deliberately influence how people perceive them by cultivating and promoting a distinct brand. Successful companies don’t leave their brand identity to chance, and neither should nonprofits. Even though most nonprofits have tight budgets for non-programatic expenses, there is still a lot they can do to shape how they are perceived—one key area is how they describe their work.

The language an organization uses to define itself should flow from its mission. The mission statement should get to the organization’s essence; people should be able to read it and understand why the organization exists and what it does. A clear mission should be the starting point for all communication and development language, such as a case statement, grant proposals, website content, presentations, newsletters, annual reports, and an informal elevator pitch. But there is more to branding than language.

It is important to pay attention to other visual aspects of the brand. Today’s world is so digital and brand-sensitive that things like website design, social media presence, logo, and multimedia are hugely important. A potential funder will likely have a bad first impression of an organization if they find a disorganized website, no Twitter feed, and a handful of materials in different design styles. These factors are not in themselves grounds for funding, but when they are subpar, potential funders can dismiss an organization—especially since there is so much competition from other worthy organizations for their limited funding.

Luckily, many nonprofits are catching on to some of the marketing approaches that have long been standard in the private sector. They are learning how much it can improve their fundraising outcomes if they have a mission-centered brand that is reinforced by multiple channels of communication—including a well-designed visual identity and a prominent online presence. Then, when it comes time to request funding, there is already a strong brand in place that reinforces and creates synergy with the funding appeal.

The Case for a Clear Case

case statement

Everybody in your nonprofit should be able to articulate a clear case for support, from board members down to frontline staff. The case is your organization’s unique reason for existing, based on a very real social need—i.e. how you are equipped to offer an effective solution to a specific problem in society. It forms the basis for all communication around your work, whether an informal conversation with funders, the content of your website, or a full grant proposal.

Your case for support should be consistent and supported by all internal stakeholders. Imagine if your staff and board told drastically different narratives of why your organization exists and what it does. Potential supporters might see you as disorganized, disunified, or even disingenuous—all which would reduce their inclination to fund you. But when you have a clear, shared case, it shows supporters that you are unified and have thought carefully about your place in the world.

The act of formulating a case statement—a concise two- to three-page articulation of your case—can help your organization deeply understand why its work is needed. Many nonprofits are so focused on program activities that they don’t spend much time contemplating why those activities are relevant. By framing your work as a direct and appropriate response to a pressing social issue, you will have a much greater impact and mobilize more support. You might even realize that there are deeper issues to address that require a modified approach.

A case statement is best created with the input of many people within your organization. This isn’t something that should be left solely to your development staff. All internal stakeholders should be on board and understand the relevance of your organization’s unique case. When you agree on it, you should make sure that everybody can also articulate it, even if only in simple terms—in fact, simpler is better

Though the creation of the case statement should be collaborative, it’s best if one person writes it, as it can become an issue of ‘too many cooks in the kitchen.’ Ideally, your board and staff would outline its basic points and somebody in development would craft it into a written form, which will serve as the basis for future development documents, such as full grant proposals.

So if your organization does not have a clearly defined case statement, get on your ED’s case to formalize one—there’s a case for it. It will clarify and unify your organization’s messaging about what it does and might even help you approach your work more effectively.

The Case for Interim Executive Leadership

transition

An executive transition is a tumultuous time for any organization. Uncertainty is the order of the day. Some staff mourn the loss of their leader, while others update their resumes. Funders downshift into “wait and see mode,” while the board of directors circles the wagons, formulates a new plan for the organization and launches a search for its new leader.

What better time to bring in an experienced consultant with the skills and know-how to stabilize an organization?

An Interim Executive is equipped with the tools and strategies for gathering and synthesizing information quickly, the poise to reassure staff, funders and stakeholders, the focus to hold the line in the mission-critical areas, and the foresight to identify areas for improvement and further examination.

Boards need time and latitude to conduct an exhaustive search for a new leader. An Interim Executive Director can give them exactly that.  For more information on Interim Executive Leadership, visit the Support Center/Partnership in Philanthropy, which is training and developing a pool of consultants to provide this valuable service to organizations in transition.  Or you can book a free consultation and we can talk about it.

Development in Times of Organizational Change

change

Startup. Executive transition. Departure (or addition) of key staff.  Loss (or gain) of key funding relationships.  New program development. Strategic planning. Scaling. Board restructuring. Rebranding.

Is there ever a time when an organization isn’t going through some kind of crisis or transformation?

In the nonprofit world, change is the rule, not the exception. And through it all, your organization’s systems and operations have to remain consistently focused on mission and message.  Here are some strategies for making sure that happens:

Conduct an organizational analysis. Times of change are ideal for conducting a holistic examination of the organization’s functioning and effectiveness.  The organizational analysis is a framework that serves to “diagnose” the organization, identify strengths, weaknesses and areas for further investigation, support information gathering, and/or inform critical decision making.

Take your strategic plan off the shelf.  You spent hours, weeks, months, maybe even years, working on your organization’s strategic plan. But as a living document it’s never finished, and it won’t have value if unless you visit it regularly.  A time of change is the perfect opportunity to re-examine your strategic plan (if you’ve forgotten about it) or create one (if you haven’t already).  Be sure to designate a point person (consultant, board member, CEO) to monitor the plan and convene/update the team at regular intervals (no more than monthly, but no less than quarterly).

Document and share your development plan.  A written development plan, consisting of fundraising goals and a work plan to achieve those goals, is a compass. It keeps your fundraising operation moving in a clear direction, allows for seamless course correction, and helps to prevent mission creep and other distractions that can get you lost. Your development plan will be a stabilizing factor during your organizational crisis or transition.  Get  your plan out of your head and on paper so it can help guide you through the next adventure.

Maintain a strong culture of philanthropy.  Everyone in the nonprofit family – participants, board, staff, donors, volunteers,  – plays a role in fundraising.  It’s critical for all members of the team to know the big picture, embrace their role, and have the skills, resources and motivation to carry it out.  That way when change hits, the entire team is well-aligned to handle it.

If you need help thinking through a significant change, crisis or transformation in your organization, book a free consultation and we can talk about it.

Fundraising the SMART Way

SMART

I just got back from sunny Miami, where I attended a workshop that was a real eye opener.  Fundraising the SMART Way, a training and coaching program by Bristol Strategy Group, shows a way out of the blind, hair-on-fire, tin-cup method of donor cultivation employed by most nonprofits. The coaching program helps organizations create ideal donor profiles and scorecards, conduct comprehensive prospect analysis that is customized to the organization’s values and priorities, and develop a pipeline system of relationship management that allows you to move prospects through a clear continuum of engagement.  The major principles of Fundraising the SMART Way are:

  • Focus on your strengths.  Take the “S” from your SWOT analysis and put it on your chest, like a superhero.  Your strengths are what you use to make the case that you are worthy of funding.
  • Define your ideal donor, then go find them. Create a picture of your dream donor in the same way that you envision your dream house, car or vacation. Give it detail, so that you have a standard to measure prospective donors against. Use your favorite current donors as examples.
  • Do more research and less reaching.  It takes more than money to become a donor. So why limit your research to giving capacity?  Dig deeper to find out what might motivate someone to give to your organization.
  • Ask, don’t tell. I’ll cover this in more detail in a later blog. They best way to learn more about what your donors want is to forget about what you want for a moment and just ask them. Open-ended questions will get you very far in learning a prospective donor’s value sought.
  • Establish shared values.  Once you know what your donor is looking for, now you can share information about your organization – mainly, the common ground that you share in what you are trying to accomplish.
  • Attract, don’t chase.  This is more about mindset than anything else.  If you approach funding from a deficit-based mindset (PLEASE help us or we’ll go out of business!), you will appear to be desperate and therefore much more likely to repel than attract donations.  Put away that tin cup!
  • Be ambitious! Your organization has many strengths, as we have already established, and you have big ideas and a grand vision that is worthy of support. So don’t be afraid to pursue big numbers.  Try to target three times as many dollars as you are trying to raise. You can always adjust your targets and expectations along the way if necessary.

For more information on Fundraising the SMART Way, visit  the Bristol Strategy Group website.